Choice Proposal: Social Security and Private Retirement Accouonts

Proposals abound for fixing our Social Security system. Some want to leave it just the way it is, another group wants to require investment in private retirement and still others desire only to provide the option to invest in a private account. There are six bills in between the House and Senate (4 House, 2 Senate)that have not gotten a committee hearing yet. There is also a resolution in committee in the Senate to disallow consideration on any bill that includes Private Retirement Accounts as even an option for reform.

A thorough review of the proposals led me to conclude that the most insightful, innovative, best layed out reform plan was that proposed on 18 November 2003 by Senator Lindsey O. Graham (R-SC). Graham's bill (S. 1878) would allow for younger workers to take the option divert 4% points of their OASDI (old age, survivors and disability insurance) taxes into a Private Retirement Account (PRA) that would be much like the Thrift Savings Plan, in which all federal employees have the option to participate. There is a cap of $1300 on diverted funds. The remainder of the taxes would stay in the current system. For those who opt out of option 1 the remaining two options offer individuals the security of the traditional system with major differences. The second, like the first changes the benefits determination formula so that benefits are more in line with the CPI and wage growth, with PIA up to 120% of the poverty level and Incresing benefits of widows and widowers to about 75 % of what would be recived if both spouses were alive. The third option is the traditional system.

Current Beneficiaries would stay in the trditional system, while future benficiaries can choose any of the three options. However, beyond the age of 26 you are locked into the option you choose.

I feel that this plan is good because it provides options that will modernize our Social Security System and keep it solvent into the future. I also strongly beleive that Sen. Graham would never propose anything that would harm Social Security because his family depended on it to survive after his parents passed away. He comments are as follows:

"I was 22 and my sister was 13 when we lost both my parents. The illnesses were expensive and times were tough. My sister received Social Security survivors’ benefits so I know how important Social Security is to families. That’s why my commitment to the program is strong and unwavering.
" Introduction of the Social Security Solvency and Modernization Act

This personal experience only serves to strengthen his commitment to making sure that Social Security is there for each one of us into the future.No further action will be taken until after the election when this bill will be introduced again for debate.

President Bush's Reform Plan may be based on Sen. Graham's ProposalSocial Security Solvency and Modernization Act

President Bush's Social Security Reform Plan may be based on Sen. Graham's Proposal

Sen. Lindsey Graham (R-SC) has a proposal to modernize Social Security and make it solvent in to the future and it may be the basis of President Bush's policy. The proposal, called the Social Security Solvency and Modernization Act, was originally introduced late in 2003. It languished in the Senate Finance Committee because of more pressing concerns, like National and Homeland Security. However, it will be reintroduced sometime early next year after the swearing in of the 109th Congress.

The proposal grants younger workers the option of investing 4% (up to $1300) of their SS payroll taxes into a private account in the Thrift Savings Plan, a government guaranteed program. This option also allows younger people to have increased survivors benefits if something should happen to their parents and the earnings or losses from the private accoount will be offset by the benefits recived form th 96% of the taxes not invested in the account.

The second option, which also applies to middle age workers, has no private account, but provides the increased survivors benefits and current law SS benefits.

The third option provides only current law benfits. Anyone can opt for this, however, current beneficiaries will stay in the current law system.

This plan is well thought out and comprehensive. It addresses both the issue of modernization (private accounts) and solvency. Who better than Sen. Graham to address this issue. His parents passed away when he was 22 and his sister was 13. His sister survived because of survivor's benefits. He would do nothing to harm this program. He is showing leadership on this issue and is sure to raise his national profile by being a surrogate on many news shows.

More Info
The Social Security Solvency and Modernization Act (Summary)
Social SecuritySocial Security Solvency and Modernization Act
Choice Proposal: Social Security and Private Retirement Accounts